Rising private rents risk placing more of future generations in poverty while increased social rents may add billions of pounds to the housing benefit bill, a new report claims.

A lack of house building is said to be at the heart of the potential worsening situation for British renters, with political leaders urged to act to prevent today's primary school children being left with a housing market that increases their chances of living in poverty.

Projections for the Joseph Rowntree Foundation (JRF) suggest private rents could rise 89.3% by 2040 when compared to pre-recession prices in 2008 but income over the same period may only increase by 40%.

It suggests real household income will be £45,500 in 2040 compared to £32,300 in 2008 while median average private rent prices for a two-bedroom property increases to £250 per week from £132 per week.

If this occurred, then the report believes 5.68 million private renters would live in poverty in 2040 compared to 3.1 million in 2008.

In the period 2014 to 2040, the analysis believes real household income and median average private rent prices could both increase by 60.2% - due to a fall in household income to £28,400 from 2008 to 2014.

The research also claims 35.2 million people will own homes in 2040, fewer than the estimated 36.1 million in 2008.

The potential for increased spending on housing benefit varies based on Government policy and the rise in social rents, according to the report.

It has led JRF to suggest successive governments take measures to contain poverty rates, which include raising annual house building levels from 175,000 units in the 2020s to 200,000 by 2040.

Social rent rises should also be limited to 1% over inflation and the fall in the proportion of affordable social housing needs to be stopped, it added.

A summary of the report, which examined the circumstances of 5,000 people between 1991 and 2008, notes: "The housing system is changing, as private renting grows and social rents, at least in some parts of England, rise towards market levels.

"The ability of housing benefit to protect tenants from higher rents has already been reduced in response to rising cost pressures and this seems set to continue.

"Taken together, these pressures represent such a change to the British housing system that, in 25 years' time, poverty rates are likely to be higher and the relationship between poverty and housing deprivation stronger."

Julia Unwin, chief executive at JRF, said the findings were a "wake-up call" for political leaders.

She said: "After decades of failing to build enough, those in power have a responsibility to act now to build more genuinely affordable homes.

"Without that we are storing up trouble for the future - a price that will be paid by children starting school life this year. These high costs are bad for families, the economy and Government.

"We need a clear strategy that builds the homes we need in the right places and avoids locking low income households out of affordable homes."

Shadow housing minister Emma Reynolds said: "This report shows that for many people the prospect of a decent home at a price they can afford is slipping out of reach.

"To tackle this crisis we need to build many more homes but David Cameron has presided over the lowest levels of house building in peacetime since the 1920s and has refused to stand-up for Generation Rent. The Tories have no plan to tackle the housing crisis."

Sam Bowman, research director of the Adam Smith Institute, said the report gave a "worrying prognosis" of the future for Britain's renters, adding: "It should be a wake-up call to anyone interested in fighting poverty in Britain.

"But the report's solutions, which focus on the construction of new social housing, are to some extent just a sticking-plaster.

"Building more social housing will do nothing for first-time buyers or private renters and will simply shift the rising cost of housing from some tenants to taxpayers in general.

"This is not sustainable: we need to make all housing cheaper by making it easier for the private sector to build new homes."

Housing Minister Brandon Lewis said: "This report is full of exaggeration and fails to consider what this Government has done to turn around the housing market we inherited after the last Administration's housing crash.

"Under this Government rents have fallen every year in real terms across the country, while housebuilding levels are now at their highest since 2007.

"Since 2010 we have also delivered more than 200,000 affordable homes across England with plans to invest billions of pounds in the three years from 2015, which will lead to the fastest rate of affordable housebuilding for two decades. On top of that we're investing billions in delivering new homes specifically for private rent.

"Reforms to the planning system also means councils can now decide where new homes should go and planning permission for 230,000 homes was granted in the past 12 months across England."

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